Komatsu China Sales Jump as Recovery Accelerates From Slump

  • Average monthly operating hours for machines also on rise
  • Share of revenue from China has dwindled to just 5 percent

Komatsu Ltd., the world’s second-biggest maker of construction and mining equipment, said its sales of excavators in China almost doubled last month, signaling an acceleration in the recovery from a five-year slump in what was once its largest market.

Sales of diggers, including mini excavators weighing less than 6 metric tons, jumped 97 percent to 373 units in September from a year earlier, Akira Sato, a spokesman for the Tokyo-based company, said by phone on Wednesday. Total demand in China for machines built by foreign suppliers rose 84% to 2,209 units, he said.

Komatsu’s rebound in China began in May, with on-year sales growth quickening in August to 60 percent. In fiscal 2011, the nation accounted for almost a quarter of the Japanese company’s sales, more than its home market, according to data compiled by Bloomberg, but that figure had dwindled to just 5 percent in the year to March as China’s economy sagged.

Excluding mini excavators, Komatsu’s sales in China jumped 115 percent to 310 units, while wider demand increased 89 percent, according to Sato. The company said this week its Komtrax remote monitoring system showed that the average monthly operating hours of its diggers in China rose 12 percent in September from a year ago.

Hitachi Forecast

Chinese demand for excavators built by non-local suppliers totaled 19,000 units in the year to March, about one-sixth of its peak in 2010, according to data from rival supplier Hitachi Construction Machinery Co. The Japanese company forecast in July that demand would fall another 6 percent in the current year.

International Monetary Fund’s latest forecasts predict China’s economy will expand 6.6 percent this year and 6.2 percent in 2017, unchanged from earlier projections. By contrast the IMF lowered its 2016 forecast for advanced economies to a paltry 1.6 percent.

Komatsu’s shares rose as much as 1.8 percent and traded 1 percent higher to 2,398.5 yen at 9:21 a.m. in Tokyo trading.

The shares have risen about 20 percent this year in Tokyo, although it’s first quarter saw profit slumped as demand languished in some of its important markets and a stronger yen crimped overseas revenue. In July, it agreed to buy Joy Global Inc of the U.S. . for $2.89 billion in anticipation of a rebound in commodity prices.

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